Do railroad crews pay state income taxes to each state that they “work” or travel thru ?
No.
For tax purposes, train crews are considered to be employed at their home base. In other words, they are paid at only one location and that is their place of employment. If the state of residence and the place of employment are the same, taxes are paid to that state. Different rules may apply if a person’s place of employment and state of residence are different.
If you are looking for information specific to your own situation, best you contact a tax advisor.
Jay
Correct, I work for a company headquartered in Wisconsin and my regional territory contains ten Midwestern states and I travel to all of them, however I live in Illinois and that is where I pay state income taxes (yuk, some of the highest in the country).
If you think Illinois income taxes are high, don’t plan on moving to Wisconsin for a better deal.
Jay
It’s all in where you live. If your place of employment is in state X but you live in state Y, you’ll pay taxes in Y. There may be exceptions.
I might add that for clerical or other personel that work specific jobs in differing locations around a railroad…they do pay local taxes for each state or municipality in which the specific job was headquartered.
One year when I was an extar telegraph operator (there is a basically vanished profession) I think I got about 14 different W-2’s for the various locations I had worked during the preceeding year. Most were for local income and school district taxes.
Jay, I know you’re a tax person, and it’s possible that the laws have changed over 30-some-odd years. My home base has always been Proviso, but for the first three months of my employment I’d often get called for road trips to Butler. And they took Wisconsin income tax out of my check, presumably on the portion of my income made while working in Wisconsin (or maybe what I earned on the trips home that started up there).
I think Illinois had some sort of reciprocating agreement with Wisconsin, under which I got the Wisconsin money back and paid more to Illinois.
Like I said, this was many, many years ago (1971, to be exact).
My dad used to work for Pepsi and there was one county in the state that he had to pay taxes based upon the amount of time he was there working, which was not at all that much time. But they took a percentage of the time he was there and based it on that.
So I guess in some places state to state doesn’t matter either.
Brian (KY)
Yes, I know what you are talking about having lived in Wausau back in the seventies. However, consider this…we have RTA transit taxes of about 30 cents per gallon of gas for the trains, subways, etc. and YOU DON"T…also we pay a heck of a lot more for our real estate and related real estate taxes than you guys, and now that I think of it just about everything is more expensive here in metro Chicago than just about anywhere in Wisconsin, including Milwaukee and Madison, except state income taxes…OH WELL.
Carl-Illinois and Wisconsin now have a reciprocal agreement. A resident of one state employed in the other will have withholding based on the requirements and will pay taxes to the state of residence.
In general, if such agreements are not in place, taxes will be paid to the state of residence on total income and then the resident state will allow a credit or reduction of the taxes due for any out of state taxes paid.
All that being said, a state does have the right to define the circumstances for when a non-resident is required to pay taxes on income earned in that state. It will vary from state to state, but generally something like a sales call won’t attach income at the location of the call. However, spending 6 months as a consultant at the client’s “out of state” location may require taxes to be paid in that state.
Going back to transportation employees, i.e., pilots, truckers and trains crews, I think that it is rather uniform that the home base defines the point of employment.
Jay
elofan, put them[:)] (ELO) on your ipod or CD player and enjoy the fact that you are not paying [8]California,Hawaii,[xx(]New York[:(][:(!],Maryland, Massachusetts, Pennsylvaina[:(],Oregon or Both Washingtons (State, or District of Columbia!)income taxes, whose base/maximum index rates are all higher than Illinois. Unless, you reside in Chicago, which at last word had a proposal for a city income tax for the libs on the board of Aldermen to consider. (oops! AlderPEOPLE-- We must be all inclusive here,shouldn’t we?) As for Hawaii, the weather is nice but, there are basically no trains there, for the most part.
Well, you could move to Texas, no state income tax at all…
Of course, you have to live in either a desert or a swamp, but hey…
Ed
I live in S.D. What are state income taxes?[:D]
Yep, I know exactly what you are speaking about, having lived in NY, PA, MD, WI due to various career moves…not one of my locations has afforded me a tax break. I have a buddy who lives in Plano, TX and paid about half of what I paid for my house here in DuPage County, IL and he has about twice as much house and I believe does not pay a nickel in State income tax…what a deal!
Some places are better, some are worse, but generally you will get what you pay for. And ultimately we will all be forever relieved of our obligation to pay taxes-but you may not want to go there yet.
Jay
Years ago Indiana decided they would collect tax on the amount of wage earned by folks traveling through the state. To get a test case they arrested a truck driver on the toll road but after a lot of agony, the state lost.
Then one state, can’t remember which, decided they were going to enforce the liquor laws on airliners overflying much like it was for railroad liquor service. That too quickly fizzled out when the airlines said in effect, try and pull us over to the curb.
so what’s a nice decent sized (10k-20k pop.) town to move to in texas? lol i’d prefer tropical over desert. maybe close to an amtrak train to IL. texas eagle maybe?
Jeaton is generally right, probably because blue collar and middle-income workers are small fry in the eyes of the state revenuers. Another reason states don’t try to collect taxes from non-residents who perform work in them is the chaos that would result if everyone had to keep diaries of their whereabouts. It’s a possible compliance nightmare. There are exceptions.
First, if you commute into New York City you have to pay a “non-resident income tax”. There may be other entities with similar taxes.
Second, if you’re a CEO or NBA star some states do collect income taxes:
http://moneycentral.msn.com/content/Taxes/P112872.asp
If you read the article you’ll see why it’s not extended to every worker. The danger is that more and more people will get caught up state tax programs for non-residents.
TITLE 49 > SUBTITLE IV
SUBTITLE IV—INTERSTATE TRANSPORTATION
§ 11502. Withholding State and local income tax by rail carriers
a) No part of the compensation paid by a rail carrier providing transportation subject to the jurisdiction of the Board under this part to an employee who performs regularly assigned duties as such an employee on a railroad in more than one State shall be subject to the income tax laws of any State or subdivision of that State, other than the State or subdivision thereof of the employee’s residence.
(b) A rail carrier withholding pay from an employee under subsection (a) of this section shall file income tax information returns and other reports only with the State and subdivision of residence of the employee.